Spain splashes out €12 billion on chip making

The Spanish government has approved plans to spend more than €12 billion of public money on the manufacture of semiconductors.

The Council of Ministers green lighted what it terms PERTE Chip, or the Strategic Project for the Recovery and Economic Transformation of Microelectronics and Semiconductors. The project is designed to strengthen R&D and design in the microprocessors space, as well as covering the construction of manufacturing facilities in Spain and incentives for chip manufacture.

The total budget for the project has been set at €12.25 billion through 2027. The money will predominantly come from an addendum to the country’s post-Covid Recovery, Transformation and Resilience Plan, which will come later this year.

In a statement published by the government, Nadia Calviño, First Vice-President of the Government of Spain and Minister for the Economy and Digital Transformation, described PERTE Chip as “probably the most ambitious project of the recovery plan,” citing both the level of investment involved, the impact on industry, and its contribution to efforts by both Spain and the European Union towards autonomy in technology.

Indeed, in March last year the EU shared an ambitious goal of producing 20 percent of the world’s semiconductors by 2030, although admittedly it didn’t have much to say on how it expected to achieve that. To be clear, that 20 percent figure refers to market value and represents a doubling of EU chip-making, which accounted for 10 percent of the global total in 2020.

Earlier this year Brussels unveiled plans to plough €43 billion worth of investment – both public and private – into the European chip-making sector, focusing in particular on R&D, design and manufacturing. Once again, the EU had plenty to say about bringing chip manufacture in house to help sidestep any future crisis and/or supply chain issue akin to those that have disrupted the technology market in recent years.

Projects like that in Spain will go a long way towards the EU achieving its goals. Calviño herself said as much, noting that PERTE Chip is one of a number of similar projects underway in Europe.

“The shortage of semiconductor production in Europe means a reliance on Taiwan, the United States, South Korea, Japan and China, which is a situation that must be reversed,” the government statement reads.

The biggest challenge to the EU achieving its target comes not from its ability to manufacture significantly more semiconductors – although that is a consideration, of course – but from the fact that many global markets have had similar ideas.

Essentially, when it comes to chip-making, everyone is now at it, following the recent shortages. The US government is doing its best to ramp up domestic production, China is working hard towards chip self-sufficiency, and Korea’s SK Telecom has semiconductors at the heart of its SK Square spin-off, to name just three of a number of recent global initiatives in the space.

Understandably, given the extent of global demand, everyone wants both more chips and more control over the supply chain. That won’t affect the EU’s ability to make its own semiconductors, but might make that 20 percent target harder to hit.

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